Tax time is coming up and it can be a very stressful and confusing season. Here at Hire Electric we’re all about making solar easy. The federal tax credit is pretty easy. For information on the Federal Residential Energy Tax Credit visit DSIREUSA.ORG. There you can see that the tax credit for solar electric systems is 30% of the elegible system cost, with no limit to the amount for systems placed into service between 12/31/08 and 12/31/16 (unless the oil companies have their way and change the current law).
Your system needs to be “placed in service” by Dec 31st of the year you want to take the tax credit. If the system is placed on a new home the “placed in service” date is the date of occupancy. We end up doing lots of snow shoveling and on-roof ice chipping in late December for those solar enthusiasts who like to wait until the last minute. The home does not need to be the owners primary place of residence.
Once a homeowner has their system and is eligible for the credit they use IRS for #5690 and fill out Part II, Line 15 (2011 tax year). This form gets attached to your 1040.
The tax credit can be carried forward if your tax liability isn’t large enough to take full advantage in year one.
Easy. Of course you need to consult a tax professional for the whole story.